Boston Small Business Owners Need Regular Workers’ Compensation Reviews

A small business owner out of Nantucket has pleaded guilty to criminal charges, alleging he skirted Massachusetts law regarding proper insurance coverage for workers’ compensation. accountingwork1.jpg

Our Boston business lawyers know that these laws cover virtually all operations, no matter how small — even if the only person employed at your company is you.

That’s why it’s important to consult regularly with an attorney about all things concerning your business – including your insurance coverage – so that you don’t find yourself paying costly fines – or worse.

In many cases, these types of errors are the result of simple oversight. The government may not be understanding, though, if you find yourself under investigation.

Of course, there are times when business owners are intentionally or blatantly dishonest in reporting the number of employees or in characterizing the type of work those employees do. The aim in such cases is paying less for their insurance. That’s what’s alleged to have happened here.

According to the Massachusetts Attorney General’s Office, the 63-year-old roofing company owner reportedly downplayed elements of his business so that he could reduce his premiums. He only had to pay the minimum rate on his policy, despite the fact that the nature of his business was such that workers were actually at high risk of injury. And although he reportedly had four full-time employees working for him during the time frame between 2008 and 2010, he reported none of them.

As a result, he was charged and ultimately convicted on five counts of Workers’ Compensation Fraud, prompting a judgement of two years of probation and a requirement to pay $42,000 in restitution.

Cases like this aren’t rare. The attorney general’s office reported that last year alone, the anti-fraud unit was successful in winning nearly three dozen restitution orders totaling more than $1.6 million.

Sometimes, though, employers just make mistakes. Part of avoiding them is becoming educated regarding your responsibilities and liabilities as a small business owner in Massachusetts.

The law defines an employee as any person who is in your service under any contract of hire, express or implied, written or oral. Exceptions are interstate or foreign commerce workers (who are covered by federal injury compensation law), real estate and consumer goods salespeople who work on commission and taxi drivers who lease their cabs on a fee basis unrelated to collected fares.

Other than this, pretty much all businesses have to obtain workers’ compensation insurance for their employees. That includes even yourself and family members, regardless of how many hours a week each employee logs. Failure to do so under Massachusetts General Law c. 152 may subject your enterprise to a stop work order, as well as tens of thousands of dollars in fines and up to one year behind bars.

New businesses who need to find workers’ compensation insurance can get it through either a broker who handles business insurance or through an agent. However, you shouldn’t sign off on a contract until your lawyer has reviewed it. If you have already signed and feel you are paying too much, you do have the option of appealing your rates to the state’s division of insurance.

The Brown Law Firm, LLC, has offices in Belmont and Boston. For a free and confidential consultation, call 617-489-0817 or contact us online.

Additional Resources:
Nantucket Business Owner Pleads Guilty to Charges of Workers’ Compensation Fraud, Ordered to Pay $42,000 in Restitution and Sentenced to Two Years of Probation, Feb. 15, 2013, Press Release, Attorney General Martha Coakley’s Office
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